Environmental Monitoring of GovernmentThe
Case for an Environmental Auditor by Kathryn Hollingsworth Lecturer
in Law, Cardiff Law School[146]

ABSTRACT

In November 1997 the Environmental Audit Committee
of the House of Commons (EAC) was established. The Committee is
modelled in some ways on the Public Accounts Committee of the
House of Commons (PAC), but unlike the PAC the EAC is not supported
by an independent auditor. This article argues that, despite the
limitations of audit made in accountancy literature, audit can
be a useful mechanism by which to hold government to account for
the impact of its policies and operations on the environment.
However, as a model of accountability, the current system of environmental
audit is inadequate. In making this argument, the article will
draw on two existing audit models. First, because the Government
has chosen to model the EAC on the PAC the mechanisms in place
for securing financial and value for money accountability in UK
central government will be considered. Second, the article will
look to the arrangements in Canada, where a more developed system
of environmental audit exists.

In 1994 the Labour Party published its principles
of sustainable development.[147]
This document, In Trust for Tomorrow, put forward a package
of proposals which promised to put the environment at the heart
of all areas of policy. Proposed institutional and structural
changes included the development of a national sustainable development
plan, the establishment of an environment agency, changes to the
structure of the Department of the Environment and the setting
up of an Environmental Audit Committee. It was envisaged that
this Committee would have a cross-departmental remit and powers
similar to the Public Accounts Committee of the House of Commons.
Its functions would include monitoring the implementation of the
national sustainable development strategy and questioning green
ministers about their Department's annual environmental reports
and the environmental impact of proposed policies.[148]
In 1997, the promise to create an Environmental Audit Committee
became a manifesto pledge and in November of that year, following
the election of the Labour Government in May, the Environmental
Audit Committee of the House of Commons was established.[149]

As promised in 1994, the Environmental Audit
Committee (EAC) does indeed have powers similar to that of the
Public Accounts Committee (the committee to which the National
Audit Office, the body responsible for the financial and value
for money audit of central government, reports). Its remit allows
it to monitor the extent to which the policies and programmes
of government departments and non-departmental public bodies contribute
to environmental protection and sustainable development, to audit
their performance against set targets, and to report to the House
thereon. The EAC also has structural similarities to the Public
Accounts Committee. For example, unlike most select committees
both chairs are members of the Opposition, and a minister has
ex officio membership on both committees (the Financial Secretary
to the Treasury sits on the Public Accounts Committee and the
Environment Minister is a member of the EAC).[150]
However, unlike the Public Accounts Committee, the EAC does not
have the support of an independent audit body. This is despite
recognition by the Labour Party in 1994 that part of the reason
why the PAC is effective is because it has the back-up of the
National Audit Office, and a promise that accordingly the role
of the National Audit Office would be expanded to include specific
investigations at the request of the EAC, as well as providing
it with regular information and advice.[151]

This article will argue that despite the limitations
of audit highlighted in accountancy literature,[152]
audit can be a useful mechanism by which to hold government to
account for the impact of its policies and operations on the environment
("environmental accountability"). However, as a model
of accountability, the system of environmental audit established
by the Government in November 1997 is inadequate. In making this
argument, I will draw on two existing audit models. First, because
the Government has chosen to model the Environmental Audit Committee
on the Public Accounts Committee I will look at the mechanisms
in place for securing financial and value for money accountability
in UK central government. Second, I will look to the arrangements
in Canada, where a more developed system of environmental audit
exists and a Commissioner for the Environment and Sustainable
Development has been established to audit government.[153]
On the basis of this analysis I will argue that the system for
environmental accountability must be more closely aligned to the
system of financial and value for money accountability. In particular,
an environmental auditor must be established, with a role and
constitutional framework which is best suited to securing environmental
accountability.

ENVIRONMENTAL MONITORINGINTHE
UK

The establishment of the EAC is in addition
to various other initiatives which have been put in place over
the course of the last decade to integrate the environment into
policy making and government practice. Most of these developments
began life under the Conservative Government and stemmed from
This Common Inheritance: Britain's Environmental Strategy,[154]
and Sustainable Development: The UK strategy.[155]
The present Government has built on and strengthened initiatives
put in place by the Conservatives[156]
and has introduced some new developments. A new Cabinet committee,
ENV, has been established to develop "high level" strategy
and to ensure the integration of the environment into policy across
government, there is a statutory requirement for the National
Assembly for Wales[157]
and Regional Development Agencies[158]
to take measures to secure sustainable development, and a Sustainable
Development Unit has been set up within the Environment Protection
Group of the Department of the Environment, Transport and the
Regions (DETR).[159]

These initiatives have been put in place to
monitor the government's environmental performance, and are largely
internal or managerial mechanisms of accountability. The EAC is
the body which has primary responsibility for external monitoring
and accountability. As set out above, the role of the EAC is to
monitor the extent to which the policies and programmes of government
departments and non-departmental public bodies contribute to environmental
protection and sustainable development and to audit their performance
against set targets.[160]
Audit in this sense does not have the same meaning as environment
audits carried out in the private sector. In the private sector,
environmental audit relates specifically to the audit of environmental
management systems and is largely a management tool. For example,
the EC Eco-Management and Audit Scheme,[161]
BS 7750 (Environmental Management Systems) and the ISO 14000 series
all focus on the quality of internal management systems.[162]

It is apparent that in relation to the role
of the EAC a much wider definition or understanding of the word
audit is intended. The EAC has, at the time of writing, reported
12 times and these reports have mostly covered pan-governmental
issues and address higher levels of policy making.[163]
For example, the Committee has reported on the environmental implications
of the pre-budget reports, the multi-lateral agreement on investment,
public service agreements and the greening government initiative.
The Government responds to these reports outlining whether it
accepts the findings of the Committee and what changes will result.[164]
Unlike the Public Accounts Committee, a follow up process has
not yet been fully developed to see whether the Government actually
implements those recommendations which it accepts. The EAC is
too recent a committee for such a procedure to have been established.

The EAC is thus providing a high level scrutiny
role, as is befitting of a Parliamentary committee. What it has
not done is systematically review the extent to which individual
departments are integrating the environment into policy making,
and greening their operations.[165]
It has neither the resources, time, nor expertise to carry out
this function. This is not to deny the importance of the EAC as
a scrutiny committee, nor the expertise which its members contribute
to the process. But in order for the committee to achieve the
same degree of success as the Public Accounts Committee, which
the government intended,[166]
an environmental auditor must be established. In order to fully
understand what role that auditor should have, and the constitutional
framework within which s/he should operate, we need to now look
at the use of audit as an accountability mechanism.

AUDITASA MODELOF ACCOUNTABILITY

Over the last 20 years, the use of audit in
both the public and private sectors has spread from a check on
the financial statements of an organisation (financial audit),[167]
to studies into the economy, efficiency and effectiveness of spending
(value for money audit), to social, medical and environmental
audits.[168]
Power has coined the phrase "audit explosion" to describe
the dominance of audit as an accountability mechanism, a dominance
which has, he argues, created a perception of audit as the only
feasible model of accountability.[169]
He sees this as problematic because, as with other types of accountability,
audit has its limitations. For example, audits are not always
directly concerned with the quality of performance but rather
with the systems in place to monitor and govern that performance.
This can lead to a so-called "expectations gap",[170]
where the public perception of audit as a mechanism to bring about
substantive improvements (for example by uncovering fraud) is
not in line with the actual purpose of audit, which is to improve
the internal monitoring systems. Neither are audits passive. They
actively construct the context in which they operate in order
to make the particular environment auditable.[171]
And, the further away one moves from financial audit the more
difficult it becomes for the auditor to retain neutrality and
the more likely it is that value judgements will be made.[172]

Despite these limitations, Power does not deny
the usefulness of audit or the gains which the "audit explosion"
might have brought about. But he warns against its dominance and
the unquestioning acceptance of audit as the only suitable model
of control or accountability. Power sees audit as fitting within
one of two models of accountability. The first, style A, is quantitative
and involves single measure, external agencies, long distance
methods, low trust, discipline, ex post control, and private experts.
Style B, in contrast, is qualitative and involves multiple measures,
internal agencies, local methods, high trust, autonomy, real time
control, and public dialogue. In most situations audit uses style
A mechanisms to resolve accountability problems. But, according
to Power, what is necessary to maximise the gains of style A accountability
is for it to be used in conjunction with some of those aspects
of style B.[173]

In seeking a model of accountability to use
in the environmental context, one must be careful not to transplant
the financial audit model onto the environmental sphere without
taking account of the above limitations. But neither should one
be deterred from a particular accountability model because of
problems identified in other disciplines. Given that the Government
has chosen an audit model for environmental accountability, this
article will focus on how that model can be used most effectively.
In doing so, lessons will be drawn from the financial/vfm audit
system in the UK, and the more developed system of environmental
audit used in Canada. At the same time, by taking account of the
work by Power and looking at ways to combine some aspects of style
B accountability with audit, we can hopefully avoid some of the
pitfalls of audit highlighted by him.

In UK central government, audit is part of a
system of ex ante and ex post mechanisms used to achieve accountability
for public expenditure.[175]
Accounts of money spent by a department are prepared annually,
the responsibility for which lies with the departmental accounting
officer. The audit of those accounts is carried out by the National
Audit Office (NAO), headed by the Comptroller and Audit General
(C&AG), an officer of the House of Commons. In addition to
financial auditing, the NAO is also empowered by section 6 of
the National Audit Act 1983 to carry out value for money examinations.
The NAO reports to the House of Commons, primarily through the
Public Accounts Committee (PAC).[176]
The Treasury also has an important role in the process.[177]
The Treasury's responsibilities include: establishing internal
rules on accounting and financial procedure,[178]
overseeing a system of internal audit; liaising with the PAC;
and appointment of departmental accounting officers.[179]

Space precludes a thorough evaluation of the
system of financial and value for money audit. But a recent analysis
has shown that the system of public sector audit for central government
works well, particularly since reforms in 1983 established an
independent NAO, and increased the C&AG's jurisdiction to
include value for money audit.[180]
In coming to such a conclusion three aspects of the system were
identified as being of particular importance. First, the independence
of the main actorsin the case of central government audit,
the C&AG and NAO from those they audit.[181]
Second, there is a mechanism for reporting the outcome of the
audit to a body which is also independent from those being audited,
and which has the ability to call the auditee to account, namely,
the PAC.[182]
Third, the system of central government audit, culminating in
the PAC hearing, achieves the aims of both managerial and democratic
accountability. Democratic accountability refers to the process
by which Parliament, on behalf of the electorate, holds government
to account. Managerial accountability is concerned with how government
in the narrow sense (ministers) holds to account government in
the wider sense (all those organisations such as departments,
non-departmental public bodies, NHS bodies and local authorities
who do the work of government). When the NAO and C&AG audit
the accounts of government bodies, and report to the PAC, they
are concerned with the extent to which a set of rules have been
complied with. These rules are not imposed on government from
outside but are rules which it uses to control itself. The system
of audit uses democratic accountability to Parliament to reinforce
self-regulation within government. In particular this helps the
Treasury to control departments and to reinforce managerial accountability
within departments.[183]

The extent to which democratic and managerial
accountability overlap can be illustrated by looking at certain
aspects of the PAC hearing. First, the main witness before the
Committee is the accounting officer. If the system were seeking
only to secure democratic accountability then the primary witness
could be the minister, in accordance with the normal convention
of ministerial responsibility. The appearance of accounting officers
before the PAC reflects the importance of the hearing as a mechanism
to secure managerial as well as democratic accountability.

Second, the PAC usually acts in a non-partisan
way. This is due in part to the convention that the chair of the
Committee is always a member of the opposition, and because it
is accounting officers, who as civil servants are supposedly politically
neutral, who appear as the main witnesses. The relative absence
of party politics shows a recognition by the PAC that their role
is not only to secure democratic but also managerial accountability.

Third, there is a close relationship between
the Treasury and the PAC. The Treasury has an important role in
the internal control of government finances.[184]
Evidence of a close relationship between the Treasury and the
PAC would strengthen claims of an alliance between the aims of
democratic and managerial accountability. This is true on a number
of levels. First, the Financial Secretary to the Treasury has
ex officio membership on the PAC, which was, until the creation
of the EAC, unique for scrutiny select committees.[185]
In addition, the Treasury Officer of Accounts attends every PAC
hearing as a witness and is involved in briefing the relevant
accounting officer before the hearing.[186]
Finally, once the PAC has reported, the response from the department
comes officially in the form of a Treasury Minute. Although the
minute is in practice drafted by the department itself,[187]
it is demonstrative of the Treasury's central role in the process.
We can see therefore, that managerial and democratic accountability
are intrinsically linked.

Although the above analysis relates specifically
to financial and vfm audit, the constitutional principles which
underlie the systemindependence, an audience and a convergence
of the aims of democratic and managerial accountabilityapply
equally where other types of accountability are being sought through
the use of audit. The extent to which the current system of environment
audit meets these criteria will be considered below. First though,
it is useful to look in more detail at an established system of
public sector environmental audit, namely the Canadian Commissioner
for the Environment and Sustainable Development.

The Canadian Commissioner for the Environment
and Sustainable Development

Canadians were first promised an Environmental
Auditor General by the Liberal Party in their 1993 electoral campaign.
Upon election, the Liberal Government requested the House of Commons
Standing Committee on Environment and Sustainable Development
to report on the possibility of establishing an environmental
auditor, what the functions of such an officer should be, the
implication for government resources, and the extent to which
existing mechanisms and programmes could effectively carry out
those functions.[188]
Seventeen recommendations were made, centred around the statutory
creation of a Commissioner for the Environment and Sustainable
Development,[189]
which would be independent of government and separate from the
Office of Auditor General.[190]

The Government subsequently created the Commissioner
for the Environment and Sustainable Development, although not
all of the Committee's recommendations were followed. In particular,
the new Commissioner was established following amendments to the
1977 Auditor General Act.[191]
Consequently, the Commissioner is appointed by the Auditor General,
and carries out functions on his/her behalf. The Commissioner
thus has dual accountabilitys/he reports annually to Parliament
but is managerially responsible to the Auditor General.[192]

The placing of the Commissioner within the Office
of Auditor General can be, and was, criticised for sidelining
environmental concerns. Nonetheless, there is now recognition
that this has a number of advantages: first, the Commissioner
has benefited from the status of, and high regard for, the Auditor
General; second, the Commissioner was able to take advantage of
a well established infra-structure; and third, issues of overlap
between the Commissioner and Auditor General can be more easily
resolved.[193]

The Role of the Commissioner

The Auditor General Act 1997[194]
states that "the purpose of the Commissioner is to provide
sustainable development monitoring and reporting on the progress
of the 24 category I departments towards sustainable development,
which is a continually evolving concept based on the integration
of social, economic, and environmental concerns..."[195]
The Commissioner assists the Auditor General in performing those
duties that relate to the environment and sustainable development.[196]
These duties have been enhanced by including the environmental
effects of spending in the list of issues on which the Auditor
General can report to Parliament. In effect, the 3Es are now the
4Es (economy, efficiency, effectiveness and environment).[197]
In addition, following the 1995 amendments, section 24 of the
1977 Act now requires departments to prepare sustainable development
strategies. Thus, the Commissioner's role is fourfold:

(i) to make any examinations and inquiries
that he feels are necessary to monitor the extent to which category
I departments have met the objectives and implemented the plans
set out in their sustainable development strategies;[198]

(ii) to be responsible for the value for
money audits which are primarily concerned with environmental
issues;[199]

(iv) to receive petitions from individuals
on behalf of the Auditor General.[201]

Constitutional Framework

Any person or body appointed in order to secure
government accountability should be independent of those they
are calling to account.[202]
Ideally this should be secured by statute. The amendments to the
Auditor General Act do not set out either the appointment procedure
for the Commissioner, nor the length of term of office. The process
of selection of the Commissioner is much the same as it would
be for any senior officer. The Commissioner is, therefore, appointed
by the Auditor General within the terms of the Public Service
Employment Act. When the first Commissioner was appointed, the
Auditor General consulted the Minister of the Environment. There
is no statutory provision providing for such consultation, it
was done on the basis of an understanding between the current
Auditor General and the Minister.[203]

The Commissioner remains in position until s/he
retires, resigns, or is asked to leave by the Auditor General.
There is no protection for the Commissioner if the Auditor General
chooses to dismiss him/her. No Parliamentary approval is necessary
though Parliament could ask the Auditor General to testify about
his reasons for dismissal.

The level of the Commissioner's salary is determined
by the Auditor General. The Auditor General's own salary is specified
by statute and deputy Auditor Generals' salaries are set at 85
per cent of that of the Auditor General. The Committee for Environment
and Sustainable Development recommended in their 1994 report that
the Commissioner be paid a salary comparable with a puisne judge,
but this was rejected. The budget of the Commissioner is controlled
by the Auditor General, although the Auditor General is confined
to an extent by promises made to Parliament.

The Commissioner reports annually to Parliament.[204]
The Commissioner's first substantive report was published in 1998.[205]
In practice, the main audience for the Commissioner's reports
is the Standing Committee on the Environment and Sustainable Development.
This is not a specific environmental audit committee but the departmentally
related committee for Environment Canada, which also has responsibility
for calling to account the National Round Table on Environment
and Economy, and the Canadian Environmental Assessment Agency.

As is common before Canadian committees, the
main witness before the Committee for the Environment and Sustainable
Development is usually the deputy minister, the senior civil servant
of the department. The Commissioner also appears as a witness
and gives evidence.[206]
The result is that hearings can be adversarial.

Comments on the Canadian System

What relevant observations can be made about
the Canadian system, and what might be learnt by the UK from the
role and constitutional framework of the Commissioner? First,
there are a number of areas where the protection of the Commissioner's
independence is not as robust at is might be. The independence
of the Commissioner should be protected by statute, rather than
being based on the personal integrity of the Auditor General.
Such a statute could include for example; a set salary level,
either equivalent with a puisne judge or a specific percentage
of the Auditor General's salary; a specified length of tenure;
power to exercise discretion over his/her own budget and expenditure,
subject to scrutiny by an independent committee of Parliament;
and insulation from ministerial involvement in the appointment
process.

Secondly, in relation to the reporting process
the Commissioner should not be restricted to reporting only once
a year[207].
Although, annual reporting has the advantage of gaining considerable
press attention and puts sustainable development issues high on
the political agenda, placing a restriction on the number of reports
the Commissioner is able to publish can have a negative impact
on his/her effectiveness and independence. It denies the Commissioner
discretion to report as and when s/he sees fit, potentially damaging
the impact and topicality of reports and can result in an overload
for the audience at one point in the year. A specific environmental
audit committee should also be established. At present, given
that the Commissioner reports only once a year, there is no need
for a specific audit committee. However, if the Commissioner were
able to report more frequently an environmental audit committee
would be necessary. This would separate the audit role from the
general departmentally related scrutiny role. This committee could
be directly comparable with the PAC, helping to enhance its status.[208]
A specific environmental audit committee would allow a closer
working relationship with the Commissioner, which, combined with
more frequent reporting, would be more likely to lead to better
accountability.

AN ENVIRONMENTAL
AUDITORFORTHE UK

Unlike Canada, the UK does not have a separate
environmental auditor. The EAC has some support from the Sustainable
Development Unit, the main government contact point for the committee,
whose remit includes providing the EAC with support and information.
However, the Unit does not carry out environmental audits for
the EAC nor does it have the same role which the NAO has in relation
to the PAC. At present therefore, the EAC has the combined role
of auditor and audience. However, as we have seen from our audit
model above, these roles should be carried out by two separate
bodies.[209]
The opportunity to develop the role of the EAC into an effective
audience should not be lost.[210]
However, it must be provided with the standard of independent
information with which the NAO provides the PAC, and which the
Canadian Commissioner provides the Canadian Parliament. This expertise
must come from a suitably qualified source, one which is independent
from both the auditee (government) and the audience (EAC). An
environmental auditor should be established.

In addition to improving the system as a whole,
a new auditor, created by statute, would have a number of positive
outcomes for the EAC itself. First, the position of the EAC would
be more effectively secured. At present, as with any select committee
the EAC could be abolished by repealing the standing order by
which it was established. Legislation which created an environmental
auditor could provide a role for the EAC, for example in the appointment
process of the auditor, or as the primary body to which the auditor
should report. Having a role established by statute would make
it more difficult for a future government to abolish the committee.
Second, at present the EAC is reliant on witnesses and the Sustainable
Development Unit for information. Witnesses can choose what information
to give, and how to present it; the EAC has neither the access
nor the staff to obtain information itself. If an environmental
auditor was established, the reliance which the Committee has
on the Sustainable Development Unit and those it calls as witnesses
could be reduced, insulating the Committee from the influence
of the very people it is calling to account. Third, the current
EAC has only three members with previous experience specific to
the environment.[211]
An independent auditor would help a relatively inexperienced committee
to call government to account more effectively.

The development of an environmental audit role
could take one of three forms: (i) a new and separate office of
environmental auditor; (ii) an extended role for the current C&AG
to include environmental audits; or (iii) a new environmental
auditor who operates within the NAO on behalf of the C&AG.
When assessing the relative strengths of these alternatives, the
role of such an auditor must be considered, including the extent
to which the role combines both style A and B models of accountability.[212]
Attention must also be paid to the constitutional framework, specifically
the independence and audience of the auditor and the extent to
which the aims of managerial and democratic accountability are
aligned.

Role of an Environmental Auditor

There are two aspects of the Canadian Commissioner's
role which, in particular, a UK environmental auditor could have
responsibility formonitoring sustainable development strategies
of departments and "environmental audits".

Monitoring sustainable development strategies

At present there is no requirement for UK departments
to produce sustainable development strategies.[213]
The second annual This Common Inheritance report required
all departments to produce an environmental strategy by the end
of 1992. However, these strategies were in relation to "green
housekeeping" only.[214]
And although the Government has revised the UK sustainable development
strategy,[215]
this is a government-wide initiative and is not the responsibility
of individual department.[216]
As noted above, the EAC does not monitor the performance of individual
departments. However, the Committee has recommended that as a
minimum, each department should report annually on how its policies
and operations impact on the environment and contribute to the
government's sustainable development strategy; its systems and
key targets for addressing each of the main impacts; and its performance
in respect of these targets.[217]
This is similar to the information required in the sustainable
development strategies of Canadian departments.

In Canada the strategies include: assessment
of the activities of the department in terms of their environmental
impact; goals, objectives and benchmarks for measuring progress;
an action plan showing how the goals will be achieved; and an
explanation as to how the department will measure and report on
its performance.[218]
There is therefore, support for the argument that similar strategies
should be required in the UK.

The setting of targets for strategies would
be the responsibility of the department along with the Green Ministers
Committee and ENV. Independent monitoring of the strategies, and
subsequent compliance with them, could be carried out by the auditor,
and used by the EAC to call individual departments to account.
Monitoring targets would not be an easy task for an environmental
auditor, in particular s/he would have to ensure that policy objectives
are not questioned. In order to be able to most effectively audit
the strategies, the environmental auditor and his/her staff should
have considerable expertise in environmental matters as well as
auditing skills.[219]

Placing a requirement on departments to produce
sustainable development strategies which are monitored by an auditor,
could be subject to one of the criticisms of audit made by Power.
That is, that the audit will lead to the strategies being constructed
in such a way as to make them "auditable". Thus the
monitoring system would not simply be reporting on what is taking
place but would actually be constructing the environment. This
criticism could be aimed at Canada. In preparing sustainable development
strategies, departments are assisted by A Guide to Green Government.[220]
The Commissioner uses this guide to monitor the strategies and,
in his 1998 report, reported on the strategies and ranked them
accordingly. In effect this created a league table. Although favoured
by the Commissioner, this approach has the potential to produce
mis-leading results, and reward those departments which have prepared
strategies according to the specific requirements of the Guide
but which do not necessarily meet the grade when it comes to integrating
sustainable development into policy making. It is also in danger
of creating a "check list" culture, where departments
ensure they meet the criteria for a good strategy but do little
to think about long term effects of their policies and sustainable
development plans.

Despite the criticisms of this aspect of the
Canadian system, guidance can still have a positive role to play,
particularly in creating links between managerial and democratic
accountability. The Green Ministers Committee, which currently
sets targets for government and has recently published its First
Annual Report,[221]
could in consultation with the Sustainable Development Unit, have
responsibility for producing guidance concerning the content of
the strategies. Involvement of the green ministers and the DETR
in the process would help forge links between managerial and democratic
accountability. It may even be desirable for guidance to be more
complete, though not necessarily more detailed, with the development
of a document analogous to Government Accounting. This
could set out the legal and non legal responsibilities of departments,
for greening operations and policies, reporting and monitoring
obligations, including the role of an environmental auditor, and
his or her relationship with departments. Such a document could
be used to draw together all the initiatives which currently exist
and set out more clearly government's responsibilities towards
the environment. This would aid not only those within government
but also those seeking to hold it to account. The Treasury is
currently revising Government Accounting to ensure that
all advice to civil servants on policy appraisal refers to the
need to consider environmental issues.[222]
But this addresses only one part of environmental accountabilitypolicy
appraisaland as the EAC has shown, many policies with potential
environmental impacts have not been subject to policy appraisals.[223]
A comprehensive "Green Government Accounting" would
help ensure that environmental issues are not simply "bolt-on"
to other, usually economic concerns.

A senior civil servant in each department, responsible
for achieving sustainable development and for preparing the Department's
sustainable development strategy, could help ensure that policies
take account of environmental impacts. As with accounting officers,
such persons would be personally responsible to Parliament, through
the EAC. Although an exception to ministerial responsibility,
it would be no different from responsibilities currently conferred
on accounting officers.

One option would be to increase the role of
permanent secretaries to include formal responsibilities to support
the Green Ministers and ensure environmental issues are considered
in policy development, and to improve green housekeeping. The
EAC recommended such a role in its second report.[224]
The Government response to that report stated that permanent secretaries'
overall responsibility for the management of departments already
gives them a role in overseeing both environmental appraisal systems
and green operations.[225]
However, this falls short of the responsibilities on permanent
secretaries, as accounting officer, to secure financial management
of the department.

These suggestions draw on the current financial
audit system, the success of which, as we have seen above, is
partly dependent upon a convergence of aims between democratic
and managerial accountability. Environmental monitoring in both
the public and private sectors began life as a management tool.[226]
The strengthening of managerial accountability should not therefore
be too problematic. It would provide a more comprehensive system
which extends beyond the audit of environmental management systems
and forges links with democratic audit. It is unlikely that any
government will place environmental accountability on a par with
financial accountability in the foreseeable future. But if environmental
accountability is to be taken seriously then some consideration
must be given to more closely aligning it to the system of financial
accountability.

"Environmental audit"

One way in which this could be done, and a second
main role for an environmental auditor, would be to make the environmental
impact of programmes and projects the fourth "E" of
vfm studies.[227]
Departments would thus be required to show that they had spent
money with regard to economy, efficiency, effectiveness and the
environment. An enhanced role for an environmental auditor would
ensue. "Environmental audits" could either involve carrying
out studies in addition to regular vfm audits or, as in Canada,
the environmental auditor having responsibility for those vfm
studies which have a substantial environmental component (either
because of the department or agency concerned or the impact of
the particular project or policy).[228]

Inevitably, this would require much co-operation
between that officer and the NAO. Indeed, one could argue that
the NAO, headed by the C&AG, would be best placed to carry
out such a function. This was what the Labour Party envisaged
in its 1994 document In Trust for Tomorrow.[229]
The current powers of the C& AG/NAO do allow the environmental
impact of spending to be considered under the wider head of effectiveness.
If he chose to, the C&AG could develop such a role.[230]
But this fails to place upon departments any duty to show they
have considered the environmental impacts of policies and placed
the environment into the vfm equation.

Comparisons can be drawn here with the position
of value for money prior to the National Audit Act 1983. Before
1983, the C&AG carried out "prevention of wastefulness"
studies, which were in effect, vfm audits. The C&AG did not
have a specific statutory power to carry out such studies, but
neither was he prohibited from doing so. Nonetheless, by 1983
it became clear that it was necessary to put such powers on a
formal, statutory basis.[231]
The system of governmental accountability for value for money
has, as a result, improved.[232]
The same arguments can be applied to environmental audit. It needs
to be on a statutory basis to ensure that government departments
consider spending proposals after taking account not only of economy,
efficiency and effectiveness but also the environment.

It is worth emphasising again that environmental
audit here is distinct from environmental audits carried out in
the private sector, which are concerned with environmental management
systems. Power argues that these environmental management system
audits may offer benefits in relation to improved management systems,
cost savings, and legal compliance but offer less to external
parties such as the public, local authorities, shareholders and
so on.[233]
The type of environmental audit envisaged above for an environmental
auditor is wider and arguably offers more useful information for
the public and other users. Such audits, although potentially
problematic in terms of lack of neutrality (as with any vfm study
compared to financial audit), help to avoid the "expectations
gap" as they go beyond merely auditing systems to helping
to improve environmental protection.

Conducting environmental audits in this wider
sense would help to combine Power's style A and B accountability
models. Although they are a monitoring process they are qualitative,
and would use multiple measures. If the environmental auditor
also had a "capacity building" role as the Canadian
commissioner does,[234]
this would further utilise style B aspects of accountability.
Capacity building, that is, stepping outside an audit framework
and working with departments to help them strengthen their capacity
to manage environmental issues, would involve increased dialogue
with the departments and leave them to improve their own systems
leading as a result, to increased autonomy and trust. The potential
danger is that this might be seen as an advisory role and compromise
the independence of the auditor.

A different way in which style B mechanisms
might be employed would be to set up a co-ordinated system whereby
the public could comment on policies, bills, regulations and so
on before they are finalised. This could make use of modern technology,
specifically the internet, by posting bills, regulations, and
other instruments on a "noticeboard" for comment. The
responsibility for running the system and taking into account
the views of the public would be the departments', and the environmental
auditor could be responsible for overseeing the operation of the
system, and monitoring the extent to which departments took account
of comments made.[235]

Having looked at the possible role for an environmental
auditor, the next question is who should this auditor be? Should
the C&AG's remit be extended to give him specific authority
to carry out such a role, or should a new environmental auditor
be established? And, if so, should that auditor be within or outside
the NAO?

The Constitutional Framework of an Environmental
Auditor

There are a number of factors which support
the establishment of a separate auditor rather than extending
the role given to the C&AG. First, if the C&AG's jurisdiction
is increased to include environmental issues, there is a possibility
that the environmental side of vfm studies will be sidelined and
inadequate attention and publicity given to the role. A separate
auditor would avoid such problems because his/her primary concern
would be with the environmental component of vfm. This would help
increase the attention given to the environmental aspect of vfm
studies, and more generally raise the profile within government,
the media, and the public. Second, a separate auditor would guarantee
a clear delineation between the environmental audit and other
vfm audits, and so the issue of which committee the reports go
before would be more straightforward. Reports by the C&AG
would continue to go before the PAC, and reports by the environmental
auditor would go to the EAC (as is the case in Canada). If on
the other hand, the C&AG was given an extended role, the PAC
may be reluctant to relinquish its own role as primary audience
for all NAO reports,[236]
and a role for the EAC would be lost.[237]
Finally, environmental audit requires specialist environmental
expertise which the would not be able to provide.

Given that a separate environmental auditor
is necessary, the question now is, should that auditor be within
the NAO and serve the C&AG, similar to the Canadian arrangements,
or should a new Office of Environmental Auditor be established?
There are a number of reasons in favour of an environmental auditor
being within the NAO. In Canada despite initial reservations,
the Commissioner has benefited from a well established infrastructure
and the high regard with which the Auditor General is held. The
same could be true in the UK. And there are already links between
the EAC and NAO which could be nurtured.[238]
Again, as in Canada, issues of overlap which occur could be more
easily resolved if that auditor operated within the NAO. Finally,
placing an environmental auditor within the NAO is a model more
likely to be accepted by the Government because it would not involve
significant new expenditure nor radically alter the status quo.
However, it is essential that the environmental auditor should
be able to appoint his/her own staff. Environmental audit is a
multi-disciplinary task which requires expertise in a number of
areas, including science and law as well as accounting.[239]
Qualified accountants have an important contribution to play in
providing advice concerning the audit of systems but the staff
of an environmental auditor should also be drawn widely from other
disciplines.[240]

Independence

The independence of an environmental auditor
should of course be protected. Establishing the post by statute
would secure it from abolition without proper Parliamentary scrutiny.
Equally, there should be no ministerial involvement in appointment
and dismissal. Appointment could mirror the procedure used in
appointing the C&AG, requiring consultation with the chair
of the EAC. The present chair of the EAC is a member of the Opposition
so this would help to ensure a non-partisan appointment. As yet,
this practice has not developed into a constitutional convention
(unlike the PAC), but there is no reason why it should not. Dismissal
of the auditor should only be allowed on set grounds (ill health,
mental incapacity, bankruptcy) after the approval of both Houses
of Parliament. It is important that there is a fixed term of office
which is long enough for the auditor to have an impact but not
too long that the relationship between the auditor and government
becomes "cosy".

The resources available to the auditor would
have to be such to allow him/her to carry out his/her job effectively.
As with the C&AG the budget could be approved by the House
of Commons. At present the task of approval of the C&AG's
budget falls on the Public Accounts Commission. Its role could
be extended to include scrutiny of the budget of the Environmental
Auditor, and the committee renamed to reflect its wider role.

Appointment and dismissal on these terms would
put the environmental auditor on a par with the C&AG rather
than working for him/her. However, if the environmental auditor
is to be established within the NAO, then it seems inevitable
that s/he will work for the C&AG, as in Canada, to avoid any
usurpation of power from the C&AG. A role would have to be
given to the C&AG in appointment and dismissal, but the same
protections must still apply, for example, consultation with the
chair of the EAC and a fixed term of office.

Audience

We saw above that the PAC is successful because
it meets the needs of government as well as Parliamentie
managerial and democratic accountability are both achieved.[241]
The proposals set out above for a senior environmental civil servant
within each department, who would appear before the EAC as main
witness would help achieve this. This would remove the minister
from this part of the process and help to de-politicise the hearing.

One difference between the EAC and PAC which
would have to be addressed is that the EAC can, under the standing
order which established the Committee, examine policy and make
policy recommendations.[242]
The NAO is restricted from questioning policy by legislation,[243]
and in line with this, the PAC operates a practice that it also
does not consider the merits of policy objectives. The PAC appears
to operate more effectively because of the restriction, because
it reduces the likelihood of disagreement between members. The
EAC is not so restricted, but it may chose to follow the example
of the PAC and develop a practice not to question policy objectives.

Democratic and Managerial Accountability

Finally, for an audit system to achieve effective
democratic accountability, the system must also meet the needs
of managerial accountability, and vice versa. The system for control
of public expenditure is one which has been developing for well
over 100 years. It is unrealistic, therefore, to expect an alignment
of democratic and managerial accountability to occur in the field
of environmental audit straight away. However, as we saw above,
some long term aims might involve: the establishment of senior
civil servants within departments who are responsible for environmental
management and who appear as the main witness on behalf of their
department before the EAC; and an increased role for the DETR
including a good working relationship with the EAC. The EAC recognises
the importance of managerial accountability and heard evidence
from some permanent secretaries before publishing their second
Greening Government report. The reforms outlined above, along
with an independent auditor, would further develop the process
initiated by the EAC and go some way towards securing an effective
system of environmental accountability.

CONCLUDING COMMENTS

We have seen above that if the government is
to continue with a system of environmental audit to achieve environmental
accountability, that system would be much improved, based on lessons
drawn from Canada and the financial and vfm system in the UK central
government, if an environmental auditor were established. The
role of such an auditor should be wider than environmental audit
as used in the private sector, and combine audit with some aspects
of what Power classifies as style B accountability.

But audit (even audit which is combined with
style B mechanisms of accountability) is not the only model of
environmental accountability which can be employed. It should
not be assumed that because environmental audit is being used
for central government it is the best model of environmental accountability
for other levels of government. There is a need to move accountability
mechanisms forward into the 21st century and look for innovative
ways to provide accountability.[244]
In this way, other options of environmental accountability could
be explored for the regional governments.[245]
For example, we could look to the ombudsman model used in New
Zealand which combines a traditional ombudsman function with an
auditor function to achieve environmental accountability. Or we
could draw lessons from Ontario where a Bill of Environmental
Rights was passed in 1993. Responsibility for environmental accountability
is placed in the hands of the citizen, by giving them various
rights including increased participation rights. Support for the
public comes from the Ontario Commissioner for the Environment
who oversees the system. Giving the public responsibility for
participating in ex ante accountability may be more useful
where populations are smaller and government is closer to the
people, and could be a model appropriate for the National Assembly
for Wales or the Scottish Parliament.

But for central government, audit is a useful
model of accountability for reasons which are both pragmatic and
based on principle. Pragmatically, an audit model has been selected
by this Government and it is arguably more useful to look at how
this might be improved than to suggest an entirely new system.
From a principled point of view, by extending the 3Es to the 4Es
and monitoring policy decisions in this way, a holistic approach
to decision making is instigated, ensuring that the environment
is not a "bolt-on" but is considered an integral part
of the decision making process. Environmental concerns may be
given greater status within government if the system for securing
accountability is comparable to the system for achieving financial
accountability. And finally, if the system is modelled on the
financial and vfm process it can help to combine managerial and
democratic accountability, with each contributing to the effectiveness
of the other.

I do not want to suggest that the mechanics
of financial or vfm audit are the same as environmental audit,
nor that audit is always an appropriate accountability model.
Account should be taken of the problems of audit identified in
the accountancy literature. But in central government at least,
a strong system of audit which includes an audience and an independent
auditor, and which combines style A and B aspects of accountability
can provide an effective model by which to achieve environmental
accountability.